1. LEAN SUPPLY CHAIN
MANAGEMENT
[Toyota Indonesia Case]
Sharing on 6th Indonesia Supply Chain and Logistics
Conference and Expo 2011 (ISCL)  “New Era of Indonesia
Supply Chain and Logistics : Center of South East Asia
J
akarta, Novem 3rd, 2011
ber
J.F. Ferry Yanto
Safety awareness : I will not use hand phone during drive the
car

2. OUTLINE
OVERVIEW [Lean in Toyota]
◙
N MANAGEMENT STRATEGY <simple Concept>
◙
Sample of LEAN IMPLEMENTATION
◙
◙ SUMMARY
LLENGE LEAN MANAGEMENT IMPLEMENTATION
◙
e Considered for Lean Management Implementation
◙
1/17
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

3. OVERVIEW
◙ GOAL of LEAN ACTIVITY COST REDUCTION PROFIT INCREASE
◙ In TOYOTA CASE ,
No Cost Reduction , , No Profit Increase
No Cost Reduction No Profit Increase
as Basic Philosophy
(1) SALES PRICE = COST + PROFIT
(2) PROFIT = SALES PRICE - COST
Sales Price Determined by CUSTOMERS
PROFIT ( ) = SALES PRICE ( = ) – COST ( )
2/17
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

4. OVERVIEW
MUDA OVER PRODUCTION
MUDA OVER PRODUCTION
TO REDUCE COST ELIMINATE WASTE ( MUDA )
[ Reduce Non Added Value Work ]
WAS THE WORST ! !
WAS THE WORST
[ 7 TYPE OF MUDA]
(1) OVER PRODUCTION HIDE PROBLEMS
and MAKE IT IMPOSSIBLE TO BE SOLVED
◙
COST DEPENDENT ON PRODUCTION METHODE
(-) Excess Man Power or
machine capacity ?
◙ COST BREAKDOWN ANALYSIS
IMPACT TO COST INCREASE
Traditional Production
Material
Operator A
Finished
Products
Operator B Operator C
3/17
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

5. OVERVIEW
Continuous Flow Production
Material
Finished
Products
Operator A Operator B Operator C
 Comparison as the traditional way production & continuous flow production:
- √ Eliminate MUDA stock
- √ Eliminate MUDA move
- √ Save more space
In TOYOTA PRODUCTION SYSTEM :
Always “CUSTOMER FIRST” Attitude
( Produce Good Products with Low Cost in a Timely Manner )
4/17
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

6. LEAN MANAGEMENT STRATEGY < SIMPLE CONCEPT >
Lead Lead Lead Lead Lead Lead Lead Lead
Time Time Time Time Time Time Time Time
TOTAL LEAD TIME
TOTAL LEAD TIME
(1) SHORTENING LEAD
TIMESimplifying the Process
●
● Continuous Flow ( One Piece Flow Process )
(2) REDUCE INVENTORY LEVEL
5/17
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

7. SAMPLE of LEAN IMPLEMENTATION
SUPPLY CHAIN IN MANUFACTURING
VENDOR MANUFACTURING DEALER CUSTOMER
 Loca
l Part
s
  
 Receiving PC store Production Dealer Customer
Import Parts Dock
6/17
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

8. SAMPLE of LEAN IMPLEMENTATION
VENDOR MANUFACTURING DEALER CUSTOMER
 Loca
l Part
s
Receiving PC store Production Dealer Customer
Import Parts Dock
7/17
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

9. SAMPLE of LEAN IMPLEMENTATION
 Domestics Logistics / Conveyance
SINGLE DELIVERY MILK RUN
Stock Stock
4 1
4x / day
(A) Hour (A) Hour
2 1
8x / day Hour Hour
12x / day
(B) (B)
1
16
1x / day Hour
Hour
(C) (C)
Variety 1 Hour
Running Stock
2 ~ 16 Hour Stock Reduction
8/17
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

10. SAMPLE of LEAN IMPLEMENTATION
 Domestics Logistics / Conveyance
(D)
SINGLE Plant 1
DELIVERY (E)
Plant 2
(F)
(D)
MILK RUN Plant 1
X-DOCK and (E) X-Dock
INTERPLANT
Plant 2
(F)
MILK RUN (D)
Plant 1
, INTERPLANT (E)
Plant 2
(F)
9/17
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

11. SAMPLE of LEAN IMPLEMENTATION
VENDOR MANUFACTURING DEALER CUSTOMER
Loca
l Part
s

Receiving PC store Production Dealer Customer
Import Parts Dock
10/17
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

12. SAMPLE of LEAN IMPLEMENTATION
 Internal Logistics
Simplify Process  Re-arrangement of Process
11/17
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

13. SAMPLE of LEAN IMPLEMENTATION
&  Linked between internal and vendor
 STOCK REDUCTION USING KANBAN ( Kanban Cyclic )
 SEQUENTIAL PARTS DELIVERY
 etc.
12/17
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

14. SAMPLE of LEAN IMPLEMENTATION
VENDOR MANUFACTURING DEALER CUSTOMER
Loca
l Part
s

Receiving PC store Production Dealer Customer
Import Parts Dock
13/17
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

15. SAMPLE of LEAN IMPLEMENTATION
 Process PRODUCTIVITY UP with elimination MUDA
Reduce MP with same output
► Others Example how to proceed ? MP : 10λ : 9λ
Output : 200 Unit : 200 Unit
Yamazumi Chart MP Process Line #1
Highest CT
Target Reduce
Problem :
Process Analysis
Unbalance Loading MP in
Process Line #1
Improvement / Kaizen
Achieve Target
14/17
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

16. SUMMARY
 TOYOTA Indonesia utilize Toyota Production System as the base of
manufacturing process, and Lean was blend inside of TPS as the focus point
in TPS Basic Philosophy : Cost Awareness with Customer First and Quality
as priority.
 Currently, Continuous Improvement/Kaizen is implemented with PDCA
cycle .
15/17
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

17. CHALLENGE LEAN MANAGEMENT
IMPLEMENTATION
NEW CHALLENGE … …
 Flexible Market Demand
4
WEAK In INDUSTRIAL RELATIONSHIP ( Coy VS
. Union )
SAME DIRECTION / VISION ( Mutual Understanding )
Need Support From Government
1 2
2 nd TIER and 1 st TIER are NOT MUTUAL UNDERSTANDING in BUSINESS
. .
CENTRALIZED (LEAN)
Base on Demography or Mapping Area Gap of Knowledge
● Good Infrastructure
Development and Growth Together
● Optimizing Current
Ideal Condition : All in 1 Area
3
5 COMMITMENT MANAGEMENT
OTHERS .
. Inconsistency Condition
► Government Regulation / Policy in Industrial
How to link with Lean Concept
► IT / SYSTEM Development  Readiness Company Adopt ? Be a Coy Culture & Reflected in People Development
► Less Localization ?  Enhance Localization
16/17
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

18. Items to be Considered for Lean
Management Implementation
 Supply Chain Management is one complete cycle and have synergy with one
another
 Skillful RESOURCES is the key point
• Knowledge and break through idea/creative idea
• Good TEAM WORK
 Strong COMMITMENT Management
• Top Management concern and monitoring required
 Business Relations [company with vendor]
• Mutual understanding  Spirit of Efficient Process
• Good relationship between company and employee (union)
 Infrastructure [road condition, others facility etc]
 Force LOCALIZATION , as a big opportunity for reducing Lead time  CR
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THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

20. POOR METHODE of CONVEYANCE and
LOGISTICS
◙ Poor method results in stagnation
asically : Conveyance is NON ADDED VALUE operations
Eliminating conveyance is the best way
■ If Conveyance is Needed,
 Best possible way is to make JIT material flow
When it is needed
Only what is needed
In the amount needed
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

21. SUPPLY CHAIN
(1) SUPPLY CHAIN MANAGEMENT BECOMING MORE IMPORTANT
1. Grasp Current Situation Accurately ( Time and Volume Stagnation included )
2. Procure Parts from Supplier close by
(2) SIMPLIFY THE FLOW
a) Macroscopic Flow
a) Microscopic Flow ( Demerits of Complicated Flow )
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

22. SUPPLY CHAIN
Goal
REDUCE LOT SIZE 1 Pieces Production
 No Stagnation
 Guarantee Quality Kanban Pulling
System
Production = +
Lead Time Processing Time Lot Size
1 Hour 10 Lot = 10 days
Productivity Up
( Improve
Chance )
1 Lot = 1 hours
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

23. INVENTORY
What is Needed to Reduce Inventory
(2) Reduction of
Production
Lead Time
Lead
Time
Ｓ h ｉｐｐｉｎｇ
Ｃｕｓｔｏｍｅｒ
Ｃｕｓｔｏｍｅｒ
production line
(1)
Logistics Kaizen
物流改善
(3) Increase reliability of (1) Logistic Kaizen
Production Line • Leveled frequent supply
 Leveled Frequent Delivery
平準化した多回納入
(4) Reduce and Limit  Leveled Frequent Pick Up
variety
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA 23

24. SUPPLY CHAIN IN MANUFACTURING
VENDOR MANUFACTURING DEALER CUSTOMER
Loca
l Part
s
 Receiving PC store Production Dealer Customer
Import Parts Dock
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

25. LEAN MANAGEMENT STRATEGY
 Long lead time conveyance/Logistics [Import parts]
√Lot Based √PxP Based
a f Part No. Order Box
AA AA-2 10 Part No. b g a 10 5
c h b 20 6
d i c
e j d
e
15 Part No. a f k
AA-1 b g l
f Minimum = 5 ~ 10 % reduction
c h m g
h
d i n
e j o i
j
Order 1 lot = 10 Unit 1 box 1 box
: 10 pcs : 12 pcs
√X-Dock
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

26. LEAN MANAGEMENT STRATEGY
 Delivery ~ Customers
eduction the Stock with giving Flexibility for absorbing miss forecast
→ Monthly Firm to Monthly Firm with Weekly Order Change
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA

27. SUPPLY CHAIN IN MANUFACTURING
VENDOR MANUFACTURING DEALER CUSTOMER
Loca
l Part
s

Receiving PC store Production Dealer Customer
Import Parts Dock
THE CHALLENGE IN IMPLEMENTING LEAN MANAGEMENT IN INDONESIA